These Stocks are Set to be Systemically Rewarded by Mobile
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As market participants, we usually talk about systemic risk but rarely talk about systemic reward. We can consider systemic reward as the potential for massive growth and construction of new revenue and innovation for a particular sector that is largely unanticipated.
Mobile has taken many by surprise as mobile apps have become the new 'websites' and mobile devices the new 'laptops'. Some companies such as Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) have been responsible for triggering this unprecedented wave of technology and consumer attention. The attention of consumers continues to shift to mobile and away from the desktop as smartphones and mobile devices are now outselling laptops and desktop computers. This trend is bigger than the PC revolution and Internet revolution and it's affecting numerous companies and institutions in very rewarding ways. Let review how this is happening.
How to be Rewarded in the Mobile Space as an Investor
When Apple released the first iPhone, a new ecosystem of mobile web app developers was spawned. A new ecosystem of hardware and chip makers began to form to support this new kind of mobile device such as Skyworks Solutions (SWKS) and Arm Holdings (ARMH). Android devices and iPhones began to be produced with the ability to run native mobile apps thus triggering yet another ecosystem of mobile app developers - software makers that were utilizing the new inputs and outputs of these devices in ways never before seen. Mobile app makers themselves came to be worth hundreds of millions and even billions up to $9 billion for one mobile app maker.
Accessory companies like Zagg (ZAGG) have also done quite well. Companies like Millennial Media (MM) and Velti (VELT) remain well positioned to support new advertising and mobile transaction ecosystems in this environment. Companies that began to help people search, navigate and discover mobile apps and content have also become very valuable as shown by Quixey (owned by Google's Eric Schmidt with a $100 million dollar valuation), Mimvi (MIMV.OB) a leader in the mobile search and recommendation space, Chomp (who Apple recently acquired), Baidu (BIDU) China's largest search engine who recently initiated a large cloud mobile app platform, Yandex (YNDX), Russia's largest search engine for web and mobile apps and Qihoo (QIHU) rival to Baidu. As we know, these kinds of search companies, like Google, have the chance at becoming behemoth advertising engines. Many who paid attention to the way technology was shifting toward mobile have benefited and this includes investors who smartly positioned in these companies.
However, other companies who did not pay attention have suffered. Lack of adapting, pivoting and innovating can lead to a deadly disposition.
One Investors Systemic Reward can be Another's Systemic Risk
Companies like Research in Motion (RIMM), Facebook (FB) Dell (DELL) and Hewlett Packard (HPQ) have fumbled drastically by not paying attention or being caught by surprise when it comes to where consumers want to spend their time. For example, Rim's former co-CEO Jim Bastille thought mobile apps were "a passing fad". Nothing more can be further from the truth as the collapse of Rim's stock price has clearly shown. It is mobile apps that are driving the sales of smartphones and devices while making or breaking companies that are or are not aware of this key fact. Meanwhile, "Facebook was falling behind in mobile as younger start-ups were innovating more quickly." Facebook and its investors have now paid the price for ignoring the most important ecosystemic growth trend in technology since the Internet itself. Dell and HP are holding the line on ignoring mobile, but one that is systemically failing them.
Where the Wild Cards Are
Microsoft is in a camp all to itself. Microsoft remains as a wild card in mobile, a large dark horse in mobile which is being illuminated by its current mobile strategy connected to Windows 8. Although Microsoft has always been considered the king of the desktop when it comes to the OS on the consumer and enterprise level, their mobile strategy seems to be smartly fusing with their desktop strategy. Think about the impact for developers and consumers if Windows mobile apps ran on mobile phones, tablets and the desktop. This could be happening very soon so stay tuned to mobile.
Fool blogger John Motley does not own shares in any of the companies mentioned in this entry.